Day 29: Managing the Rapidly Changing Landscape of Independent Radiology Practice Relationships and Health Systems

Article originally published through the American Association of Provider Compensation Professionals (AAPCP).

Introduction

There is a classic riddle that applies to change. A lily pad appears in a pond one day. Each day the number of lily pads doubles to the point that on day thirty the pond is full. On what day is the pond half-full? Answer: Day twenty-nine.

It is “Day Twenty-Nine” for hospital and independent radiology practice alignment relationships.

Change sneaks up on us rapidly in the healthcare ecosystem, especially if we are not paying attention to the current radiology services environment. Many hospitals and health systems are living day twenty-nine each day trying to manage the challenges facing independent radiology practices and increasing volume of radiology procedures.

This article will give an overview of the independent radiologist practice challenges; alignment model options for hospitals and radiologists; and the latest fair market value (FMV) and commercial reasonableness (CR) impacts.

Radiologist Practice Challenges

The following factors have created a “perfect storm”, leading to a critical shortage and surging demand for radiologist services.

• Independent Radiologist Practice Financial Challenges
  • Declining reimbursement
  • Difficulty in provider recruitment
    • • Competing with private equity (PE) backed national groups offering higher salaries and improved work-life balance (e.g., limited call coverage requirements)
      • Increased competition and availability of outpatient imaging centers
      • Remote reading capabilities no longer requiring radiologists to be onsite
  • Interventional radiologists embedded into a large diagnostic practice model can have challenges in a production compensation model
    • • Interventional radiologists breaking from imaging groups due to the inability of professional collections offsetting compensation requirements
      • Many interventional radiologists have been moving from independent group practices to hospital employment to sustain income
• Radiologist Shortage
  • Inadequate number of medical students pursuing Radiology
  • Increase demand for imaging studies from:
    • • Advanced practice providers
      • Emergency departments (both onsite and freestanding)
      • Ambulatory surgery centers
      • Outpatient or freestanding imaging centers
      • Aging population
      • Increase in oncology cases requiring radiological support
• Radiologist Annual Compensation[1]
  • Annual salaries have been steadily increasing with a major increase post COVID 19 pandemic
    • • Diagnostic Radiology 2022-2024 = 17%
      • Interventional Radiology 2022-2024 = 9%
• Corporatization of Radiology Practices
  • This trend has been increasing since 2019 and is driven by acquisitions and consolidations of independent practices
  • In 2025 the American College of Radiology (ACR) formed a new task force to explore corporatization and consolidation in the specialty
  • A June 2025 Journal of the American College of Radiology (JACR) study found that corporate-backed entities acquired 113 radiology practices and imaging centers over an 11-year period[2]
  • Between 2015 and 2022, nearly 3,500 physician practices that provide radiology services disappeared from Medicare logs, according to another 2024 analysis in the American Journal of Roentgenology[3]

Alignment Model Options for Hospitals and Radiologists

There are multiple ways hospitals and physicians can work collaboratively to increase quality and decrease costs as shown below, with the most common radiology models highlighted below.

• Call Pay (Local and Remote Readers)
  Physician call pay is an agreement whereby a hospital contracts with a physician practice to provide professional services during specific times of day based on coverage required by a hospital. Being on-call, meaning physician practice is available to respond to emergencies during specified hours. There are two types of call pay that include: 1) Restricted call pay that requires the physician to remain at the hospital while on-call, and 2) Unrestricted call pay allows the physician to be off-site but must still be able to respond within a specified time based on circumstances such as Trauma and ER.
  • Call pay structures can vary from a shift rate stipend to hourly rates
  • Restricted and unrestricted call also have various degrees of stipend
  • There is an increasing expectation from teleradiology firms to charge hospitals an increasing rate for teleradiology coverage based on time of day. For example:
    • • Day = 7a-5p
      • Swing = 5p-11p
      • Night = 11p-7a

• Medical Directorship
  A Medical Directorship is an agreement whereby a hospital contracts with a physician for oversight of specific areas of the Radiology service line program. Key responsibilities can include policy and procedure development, clinical protocol criteria, hospital department clinical oversight, quality assurance, and compliance.
  • Medical Directorships are typically structured at an hourly rate by specialty (i.e., diagnostic and interventional)
• Recruitment Support
  Hospitals can support independent physician practices through various recruitment and financial assistance agreements. These can include direct financial support like income guarantees, relocation assistance, or student loan forgiveness, all structured to ensure compliance with regulations.
  Many radiology practices have difficulty in recruitment. Utilizing hospital recruitment departments could enhance likelihood of placement. In some cases, these recruitment costs are passed on to the practice after the successful placement of a candidate utilizing a physician recruitment arrangement that follows all Stark Law guidelines.
  • The use of locum tenens has also become an increasing trend to maintain smaller independent radiology practices from closing.
  • Locums contracts are very expensive and increase the overall cost of the delivery of care.
  • Given the broader shortage and demand of radiology services, organizations are also having challenges securing locums coverage for radiology services.
  • The use of after hours coverage services are also driving increased costs and factoring in to successful recruitment based on support.
• Joint Ventures
  A Joint Venture (JV) is used to create a new company jointly owned to provide clinical or operational services. The outpatient imaging center JV model between Radiologists have long been a legacy partnership model.
  • Many outpatient imaging centers have been purchased by PE firms, and some have been purchased in totality by hospitals.
• Professional Service Arrangements
  Professional Service Agreements (PSA) are contractual agreements between a physician or group of physicians and a hospital that outlines terms for providing medical services requirements at an agreed upon compensation rate. Key areas of focus could include scope of services, exclusivity language, term and termination, compensation methodology, and performance metrics defined by the hospital.
  • PSAs are the most common relationship between hospitals and radiology practices. These arrangements are often structured to ensure coverage, and ultimately assist the practice economics (i.e., subsidizes coverage).
  • Model A
    • • Radiology practice collects and retains all professional fees and pays for billing expenses.
      • Hospital to pay an agreed upon amount per wRVU at FMV to make up the difference in group actual compensation per wRVU.
  • Model B
    • • Hospital bills and collects all technical and professional fees.
      • Hospital to pay Radiologist an agreed upon amount wRVU at FMV.
      • Hospital must have professional fee contracts in place along with billing and coding capabilities for global radiology billing.

• Employment
  Employment of physicians is a move of the physician from independent practice owner to a W-2 relationship with a hospital. The hospital provides all practice overhead and management functions and provides salary and benefits.
  • For Radiology, this is typically an option for smaller practices with limited resources and ability to recruit.
  • Each physician will have an employment contract
  • Many options on compensation structure to include base salary and incentive productivity wRVU rate at FMV.
  • Hospital must have the resources and capability to manage the practice and have professional fee contracts in place along with billing and coding capabilities.

• Value-Based Enterprises
  Value-Based Enterprises (VBEs) are emerging as a critical component of the shift to value-based payments. VBEs are defined by CMS whereby two or more VBE participants:
  • Collaborate to achieve at least one value-based purpose;
  • each of which is a party to a value-based arrangement with the other or at least one other VBE participant in the value-based enterprise;
  • that have an accountable body or person responsible for financial and operational oversight of the value-based enterprise, and;
  • that have a governing document that describes the value-based enterprise and how the VBE participants intend to achieve its value-based purpose(s).

VBEs allow radiologists and partnering entities to design performance metrics to enhance community access, turnaround times, quality of care, and efficiency in a time when resources are limited, margins are shrinking, and demand is growing. When establishing performance metrics, it is critical to define those items that require attention and align with organizational goals and needs. There is also an increasing need to validate the organization’s ability to report current baselines and track ongoing performance.

As seen above, there are many radiology alignment options to choose from. Given the national challenges in radiologist supply and increasing hospital imaging procedural demand, it is imperative to recognize the local needs of the radiology practice and the desired level of quality radiology coverage expected by the hospital.

Radiologist Fair Market Value (FMV) and Commercial Reasonableness (CR) Impacts

As noted above, Pinnacle continues to witness significant changes in radiology services provided to hospitals. These items, combined with CMS reimbursement changes, have created an inability by many programs to remain sustainable without subsidy or coverage models to support operations. Requests for diagnostic and interventional radiologists continue to exceed traditional payments for a service that is essential for both inpatient and outpatient hospital community services. This is a consistent trend being observed across the country with regards to hospitals and health systems struggling to maintain or secure consistent coverage for radiology services. Often, these systems are either needing to provide substantially more financial assistance for radiology groups or find new partners in the market that often leads to substantially higher expenses. Additionally, systems have had to create unique, short-term coverage arrangements with their providers to ensure coverage. As a result, this has challenged organizations economically and puts upward pressure and emphasis on documenting fair market value (FMV) and commercial reasonableness.

For the reasons outlined above, the market for securing radiology services has been extremely volatile the past two to three years. When assessing FMV, organizations are needing to assess the current state of the market and prevailing payments for these services. Using traditional benchmarking sources is a common industry practice; however, given the sudden volatility observed across the country, organizations are finding that the benchmark data, which historically lags behind due to reporting periods, is not keeping pace with the current market. In many instances, rates are being contracted at levels on par with historic locums arrangements. In order to document FMV and CR, organizations are relying on the specific facts and circumstances of the market conditions. In addition to utilizing standard benchmarking resources, organizations should look to prevailing market rates at which providers are being contracted at to secure these services.

Specific market factors can have a significant impact on FMV. These factors often serve as important facts to document CR. Organizations should ensure they are documenting these factors to appropriately support FMV and CR.

Key Considerations

• Manage imaging as a key enterprise-wide service line
  • Utilize a Dyad or Triad management model to include
    • • Radiologist
      • Operations Leader
      • Finance Leader
• Create a radiology advisory committee to manage:
  • Equipment capital requests across the enterprise
  • Radiologist groups contract management
  • Health system expectations on radiology performance expectations
    • • Hours of coverage
      • Turnaround times for ER, IP, and OP
• Review all radiologist contracts for consistency and uniformity on expectations
• Assign dedicated finance resources to monitor contract details each month and address discrepancies quickly
• Develop internal compliance reviews for all contract FMV and CR opinions
• Be prepared to utilize more than one radiologist solution as demand will continue to outpace the supply of radiologists

The Day Twenty-Nine reality dictates that change within the radiology ecosystem is accelerating exponentially, making focused collaboration between hospitals and radiologists a critical priority.  Success will hinge on decisively aligning all viable options with a granular understanding of the practice needs of radiologists and the strategic objectives of hospitals, ensuring optimal outcomes for the patients they collectively serve.

For more information, please contact our experts today!

Christopher Fete, JD, MHA
Partner
CFete@AskPHC.com

Jim Yanci, MS, MT (ASCP)
Principal
JYanci@AskPHC.com

[1] Source: Pinnacle Healthcare Consulting 75%-tile

[2] Trends in Corporate Acquisitions of Radiology Practices and Imaging Centers Over 11 Years. Chen, Jefferson et al. Journal of the American College of Radiology, Volume 22, Issue 6, 662 – 66. June 2025.

[3] Eric Christensen et al. “Changes in the National Radiology Practice Landscape and Indicators of Practice Consolidation From 2014 to 2023.” American Journal of Roentgenology. June 5, 2024